WESTFIELD – A week after the Commonwealth implemented a tax on software and computer services, one of the first of it’s kind nationwide, businesspeople working in the tech sector have been scratching their heads and tearing out their hair.
Chief among them in The Whip City is David Flaherty, President of the DFA Group, LLC, a Westfield-based computer company, who has been critical of the state’s rampant taxation, especially in the area of technology services.
With the Mass. Taxpayers Foundation and the Mass. High Tech Council filing appeals earlier this week against the tax, which would look to take a 6.25 percent cut on computer and software-related services, Flaherty believes that the state is wrong to try to take from this industry and possibly stunt it’s growth.
“I think it should be appealed,” Flaherty said. “It’s not needed. We already pay enough, and when we call (the Department of Revenue) and ask questions, we get referred to their frequently asked questions page online.”
Even legislators on Beacon Hill are frustrated with the rate at which Mass. residents and businesses alike are being hit with new taxes.
“There certainly needs to be more direction from the DOR,” said Rep. William “Smitty” Pignatelli (D-Lenox). “There’s a lack of understanding… people have questions that need to be answered.”
Pignatelli, who represents the towns of Blandford, Russell and Tolland in Hampden County, thinks that Beacon Hill needs to “slow down the implementation” of additional taxes until it can better explain to the public what is, in fact, being taxed, and where the revenue is going.
Flaherty agrees.
“We should be able to get something,” said the at-large City Councillor. “We (small business-owners) are essentially unpaid workers for the state. We have to collect this money for the state, and it falls on the owners.”
He also believes that this software tax should be made into a big issue in the upcoming race for the Second Hampden and Hampshire district senate seat being vacated as of today by Michael Knapik, who has reisgned to take a position as the Executive Director of University Advancement at Westfield State University.
“It should be asked of the candidates how they voted on this tax,” said Flaherty.
Dennis Driscoll, co-owner of DIF Design in Springfield, a company who has numerous clients in Westfield, is also critical of this latest tax being imposed by Boston.
“I don’t agree with it,” said Driscoll, whose Westfield clients include Michon Associates, RSP Realty, Handsome Ink, The Westfield News Group and Word of Grace Church. “It’s going to affect us and other software companies because it’s so broad. It’s going to be really hard for the government to track. There’s going to be a lot of red tape.”
When asked why it seems that the State House is looking to milk an industry that has become so vital to the Commonwealth, he gave a very simple and succinct answer.
“It’s because they’ve milked everything else.” said Driscoll, who handles the coding for the company and maintains security against hacking and other potential threats. “This could open up a real gateway in the future as far as what is taxable.”
However, regardless of if or when these taxes are stricken from the books, the minds of western Mass. small businessmen in the technology sector are unlikely to change.
“Large corporations have staffs and departments for this (taxes). We don’t,” said Flaherty, of his small businesses. “Every person thats running a small business should be doing other things, like expanding their business, not collecting revenue for the state.”
